WTI Breaches $70 On Iran, Venezuela Fears

WTI Breaches $70 On Iran, Venezuela Fears

Trump has to decide by May 12 whether to bring back sanctions against the country. There are however risks for European entities that continue to trade with Iran as they might flout U.S. sanctions and there is also a risk the deal with the remaining members could also fall apart now the United States has withdrawn.

However, he did not specify the time frame or the scale of the sanctions to be restored.

This - along with an output cap by Russian Federation and OPEC, rising USA demand and an improving economy - has helped send the price of oil to highs not seen since late 2014, though profit-taking saw both main contracts retreat yesterday.

Many were lulled into a false sense of security, believing that shale oil would keep the global market supplied forever and the world would have an everlasting cheap source of supply. "Any nation that helps Iran in its quest for nuclear weapons could be strongly sanctioned by the United States".

Trump said he would reimpose USA economic sanctions on Iran, which had been lifted under the agreement he has harshly criticized.

Longer term, there would be less oil available so prices should rise, Bailey said.

Crude oil prices were down more than 1 percent in overnight trading. In the previous session, prices briefly slid below $70 after breaching the level for the first time in 3 ½ years following news that an announcement will be made at 2 p.m. Tuesday in Washington.

Venezuela's oil output has halved since the early 2000s to just 1.5 million barrels per day, as the South American country has failed to invest enough to maintain its petroleum industry. "There is nothing sacrosanct in this market", Barkindo said. One factor that could partially mitigate any shortfall from Iran is soaring USA oil output.

Britain firmly committed to ensuring Iran nuclear deal: May
Iran's Supreme Leader Ali Khamenei has already said that Israel won't exist in 25 years if it continues to destabilize the region. The new USA ambassador in Berlin, Richard Grenell, has been warning German companies to heed the US sanctions.

"It's the same witches brew of bullish stuff: Iran, Venezuela, the lack of alacrity by Saudi Arabia to bring more oil onto the market", said John Kilduff, partner at Again Capital in NY. The futures on US WTI crude oil rose by 0.62 Dollars, or 0.9 percent, to 70.34 USD per barrel.

Iran produces almost 4 million barrels a day out of global total of about 98 million barrels per day.

Iran, which is one of the world's largest oil producers, started pumping out another 1 million barrels of oil per day when economic sanctions were lifted in 2016. And China, a huge oil importer, could also push back.

"Coupled with the ongoing plunge in Venezuelan production, the price environment has turned decidedly bullish, despite headwinds like dollar strength and soaring USA production", Platts Oil Futures Editor Geoffrey Craig said in an emailed market report.

Secretary of State Mike Pompeo is planning discussions with allies in Europe, the Middle East and Asia in an effort to win their support to pressure Iran to open talks, Reuters reported Thursday.

While the market may see declining supply in the next few months led by geopolitical uncertainties, it may also see slower economic and oil demand growth.

"Don't be surprised as oil prices climb steadily this summer and react quickly to the upside on any bad news", he said.

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